Saturday, March 23, 2013
625.00-139_ms_river_port_barge_fertilizer.tif

Urea: Buyers’ Market After 2015?

AgFax.Com - Your Online Ag News Source


Rabobank has published a new research report on the global urea industry, forecasting structural change in the global urea market due to capacity expansion by key importers and low-cost players in the Middle East and Africa regions.

“Bursting the Urea Bubble,” the report authored by Rabobank’s global Food & Agribusiness Research and Advisory, predicts that global urea market is set to enter an era of oversupply post 2015. Finding include

  • Unprecedented acceleration in urea capacity expansion by key importers (the U.S., Brazil and India) and low-cost producers in the Middle East and Africa (MEA) will drive structural changes.
  • This capacity expansion is expected to improve the self-sufficiency of the top three importers and ensure that supply growth significantly outpaces demand growth, shifting the market into a buyers’ market towards 2020.
  • Ccompetition among traditional exporters in the MEA, China and the former Soviet Union (FSU) will intensify, resulting in price pressure and capacity rationalisation in high-cost regions.

“Attractive returns in urea production have resulted in a spurt in capacity expansion projects since 2007,” Rakhi Sehrawat , Rabobank analyst, commented. “The expansion is driven mainly by the exploitation of shale gas in the United States, new gas fields in Brazil, political incentives in India, and low-cost natural gas in the MEA. Over 65 new projects have been announced that will expand global urea capacity by 30 percent between now and 2020. This rush of activity on the supply side will have a strong influence on the urea demand/supply picture in the coming five to ten years.”

The urea production boom will impact players across its value chain, especially high-cost producers and traders. As the import reliance of the main urea destination markets declines and low-cost export-oriented capacity grows, competition among the traditional players/exporters will intensify, resulting in price pressure and capacity rationalization in high-cost regions. In this market, strategic routes of the urea value chain partners (i.e. producers and traders) would need to change to adapt to this new reality in the urea industry.

For high-cost producers it means they would need to strengthen their market position through cross industry partnerships and downstream integration closer to farmers. The study predicts that winners will be those who can achieve low costs of production and/or are placed close to a demand market,  enabling them to quickly respond to demand dynamics by altering production cycles. Market intelligence and access to growers will be key success factors in this case.

Lower volumes destined for key urea importers and a diminished role of high-cost exporters in the oversupplied market will have implications for traders. They will need to make the important decision of whether to expand their overall role in the supply chain through upstream or downstream integration or by maintaining focus on trading fertilizers but increasing sourcing of urea from the emerging competitive capacities.

Tags: , , ,


Leave a Reply

Name and Email Address are required fields. Your email will not be published or shared with third parties.

Sunbelt Ag News

    DTN Livestock Close: Feeder Futures Knocked Hard for 2nd Session11-25

    Livestock: 6 Tips to Fight PEDv This Fall11-25

    Doane Cotton Close: Outside Strength Helps Prices Rebound11-25

    AgFax Cotton Review: New Stink Bug App; India Exports Drop11-25

    DTN Cotton Close: Higher on Light Volume11-25

    Tax Extenders Delays Bad for Economy, Says Senator – DTN11-25

    DTN Grain Close: Bean Complex Rallies, Grains Follow11-25

    USDA: Weekly National Peanut Prices11-25

    Georgia: 10 Farm Bill Meetings Scheduled for Mid Dec.11-25

    AgFax Rice Review: Iraq Resumes U.S. Purchases; Cambodia Wins Best Rice Award11-25

    DTN Livestock Midday: Cattle Futures Hold Sharp Losses11-25

    Winter Weather Creates More Problems for Railroads — DTN11-25

    Future of Cellulosic Biofuels in U.S. Questioned — DTN11-25

    DTN Grain Midday: Soybeans Lead Trade Higher11-25

    AgFax Peanut Review: Growers Urged to Plant Earlier; Texoma Sells Drying Facility11-25

    DTN Cotton Open: Futures Edge Slightly Higher11-25

    DTN Livestock Open: Cattle Paper to Bounce Higher11-25

    Shurley on Cotton: New Round of Weakness Sets In11-25

    DTN Grain Open: Markets Start Out Mixed11-25

    Keith Good: Farmers Care About a Labor Force, Not Politics — AFBF11-25

    Welch on Wheat: Crop Condition Down Slightly11-24

    AFB Grain-Soybean Close: Corn Under Pressure Again11-24

    AFB Cotton Close: Trading at 5-Year Lows11-24

    AFB Rice Close: Futures Turn Lower11-24

    Welch on Grain: Snow Keeps 770M Bushels of Corn in Field11-24

    Farmland Partners Buys 7 South Carolina Farms for $28M11-24

    Livestock: Hog and Pork Prices Return to Reality11-24

    Corn: Breaking Down Stalks Takes Thought, Planning — DTN11-24

    DTN Fertilizer Outlook: Winter’s Arrival May Delay Some Buying11-24

    Brazil Soybeans: Dry Conditions Still Cause for Concern11-24

    Flint on Crops: Low Input Farming May be Necessary in 201511-24

    Midwest Corn And Soybean Yields – Our Readers’ Reports – AgFax11-22

    Rice Comment: The Case for Neonicotinoid Seed Treatment11-22

    U.S. Rice: Rain Stalls Texas 2nd Crop Harvest; Crop Sales Continue11-22

    Rice Market: Sale to Iraq Moves the Market11-22

    Rose on Cotton: Looking for the Positives This Week11-21

    Grain Drying: 6 Questions About Effects Of Sudden Drop In Temps11-21

    Is Your Lifestyle Costing You the Farm?11-21

    Farmers Storing Grain Need to Weigh Risk Management Factors – DTN11-21

    Peanut Harvest Updates From Southeast, Delta And Southwest – AgFax11-21

    Cleveland on Cotton: 57 Cents – ‘The Bottom is In’11-21

    Ag Labor: Immigration Order Provides Little Long-Term Benefit – DTN11-21

    USDA: Peanut Price Highlights11-21

    Ag Policy: Farm Bills Need Long-Term View11-21

    Cotton Market Weekly Review by Region11-21

    Arkansas Cattle: Ranchers Should be Alert to Acorn Poisoning11-21

    Economist: Livestock Industry Will Have Strong Rebound11-21

    DTN Dried Distillers Grain: Cheaper Feed Source for Beef Producers?11-21

    Mississippi Outdoors: Common Deer Parasites Do Not Affect Venison11-21

    AgFax Wildlife Review: New E-Book Offers Tips for Gardening in South11-21

    Weather Challenges Florida and Iowa Farms — DTN11-21

    Vilsack: Immigration Order Creates ‘Stability’ in Ag Work Force — DTN11-21

    Texas Cotton Harvest – Still Some To Go – AgFax11-20

    Mississippi: Water Conservation Summit, Stoneville, Dec. 1011-20

    Farm Internet Service Still Slow or Non-Existent, But Improving – DTN11-20

    Yield: Important Factor in Your Irrevocable Farm Program Choice11-20

    U.S. Grain Transportation: Weekly Inspections Reach Record11-20

    U.S. Drought Outlook: Improvements Expected for California, Southwest11-20

    U.S. Energy: Planned Refinery Maintenance Light in 201411-20

    Sunbelt Ag Events

    Rice News

     

    About Us

    AgFax.Com covers agricultural trends and production topics, with an emphasis on news about cotton, rice, peanuts, corn, soybeans, wheat and tree crops, including almonds, pecans, walnuts and pistachios.

      

    This site also serves as the on-line presence of electronic crop and pest reports published by AgFax Media LLC (formerly Looking South Communications).

        

    Click here to subscribe to our free reports.

      

    We provide early warnings and confirmations about pests, diseases and other factors that influence yield. Our goal is to quickly provide farmers and crop advisors with information needed to make better and more profitable decisions.

         

    Our free weekly crop and pest advisories include:

    • AgFax Midsouth Cotton, covering cotton production and news in Alabama, Arkansas, Louisiana, Mississippi, Tennessee and Missouri.

    • AgFax Southeast Cotton, covering cotton production and news in Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.

    • AgFax Southwest Cotton (new for 2013!), covering cotton production and news in Texas, Oklahoma, Kansas and New Mexico.

    • AgFax West (formerly MiteFax: SJV Cotton), covering California cotton, alfalfa, tomatoes and other non-permanent crops in California's Central Valley.

    • AgFax Rice covering rice production and news in Arkansas, Louisiana, Mississippi, Missouri and Texas.

    • AgFax Peanuts, covering peanut production in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

    • AgFax Southern Grain: covering soybeans, corn, milo and small grains in Southern states.

    • AgFax Almonds, covering almonds, pistachios, walnuts and other tree crops in California's Central Valley.

    • AgCom 101, providing guidance to ag professionals involved in social media.

    Our newsletters are sponsored by the following companies: FMC Corporation Chemtura Dow AgroSciences.

          

    Mission statement:

    Make it as easy as possible for our community of readers to find and/or receive needed information.

              

    Contact Information:

    AgFax Media. LLC

    142 Westlake Drive Brandon, MS 39047

    601-992-9488 Office 601-992-3503 Fax

    Owen Taylor Debra L. Ferguson Laurie Courtney

          

    Circulation Questions?

    Contact Laurie Courtney